I said at that point I was going to address how this was affecting authors, and that’s going to be one of the two parts of this post.

A lot of people want to know if this is good or bad for authors, and like almost everything, in my opinion, it’s both.

My guess is that some authors are going to see tremendous increases in revenue by being part of Kindle Unlimited (KU). Others, rightfully, are concerned about the restrictions involved.

Let’s first lay things out a bit.

Authors get paid for the sale of the books they’ve written. In the traditionally publishing world, they licensed the rights to sell the book to a publisher (the deal was usually made by an agent acting on the author’s behalf), which sold the books to stores, which then sold them to customers.

A tradpub (traditional publisher) might give the author an advance against the royalties. Let’s say that you could be reasonably sure that Stephen King was going to sell a million copies of the next novel, and that you knew as the publisher you could get $10 per copy (I’m basically working with this as a hardback for this example). $2.50 of that is going to go to King.

However, the author needs a year to write the book, and needs to spend that year largely unconcerned about earning a living besides that.

You are looking at getting in $7.5 million…you’ll have expenses out of that, of course, including the actual manufacture of the book and marketing, but you’ll advance King $1 million.

The first million dollars which would have gone to King from the royalties once the book starts actually selling, you keep to pay off the advance.

So, that’s one model.

In the independent (“indie”) e-book model, the author may publish the book themselves, going perhaps through Amazon’s Kindle Direct Publishing. The author, following certain guidelines, can get 70% of the list price they set for the book. Sell it for $2.99, keep about $2.09. Of course, the author has also taken on all the expenses: they might have paid for an editor, done marketing, and so on.

If the indie set the price outside of the $2.99 to $9.99 range, they can only get 35% for it…that’s going to become important as this explanation continues.

When Amazon introduced the Kindle Owners’ Lending Library (KOLL) in 2011, they created a new income stream for authors.

Eligible Amazon Prime members with a hardware Kindle can borrow up to a book a month from a certain set of books.

The indie publishers (and those might be just individual authors) divide a variable pool of money, getting a cut of it for each borrow that happens.

Let’s say the pool is $1.5 million for January. If there were 750,000 borrows that month, everybody in the pool gets $2 for each borrow. If your book was borrowed ten times, you get $20. That $2 figure is close to what it has been actually running.

That’s a big plus if someone borrows a $0.99 book: $2 instead of $0.35. It’s about a wash with a $2.99 book that meets the other requirements to get 70%.

There are also traditionally published books in the KOLL, although not from the biggest publishers. They get paid differently: they probably mostly get paid like it was a sale, and so the author would get their normal royalty…presumably. Publishers don’t release those kind of contract details, normally.

Now, along comes KU, and the economics change.

The one big technical change is that the indies publishers don’t get a royalty unless someone “reads” ten percent of the book (not based on when they simply download it). I put “reads” in quotation marks, because of course, the system doesn’t know if you actually read it or just flipped through it…or even, I think, jumped ahead to 10%.

That’s not that big a deal, though. I doubt very many people downloaded a KOLL book and didn’t read at least 10% of it.

What makes the difference is the “Unlimited” part.

KU isn’t really unlimited, of course, but it would be unreasonable to think that “unlimited” was a literal term, in my opinion. For example, you can’t go back in time and read the book.😉 You can’t read a book on the surface of the sun. “Kindle Unlimited” is a name, not an actual definition.

In practice, though, it is pretty much all you can read. You can have ten books out at a time. I think that’s to limit the number of people using it, not to limit an individual. I could borrow ten books on August 1st. If I read all ten by August 10th, I could just borrow ten more…it’s not ten per month, it’s ten at a time.

I do find that it feels freeing. I had to make careful choices with the KOLL…I don’t with KU.

That’s going to be a big boon for books which most people would not have bought.

“My son, for his part, has already downloaded a few dozen Minecraft ebooks…”

A few dozen!

The article also suggests those books may not be that good, but the point is, that would not have happened without KU.

It wouldn’t have happened with the KOLL: after the first book, you’d have to wait until the next calendar month to get the next one.

Even if we figure they were all ninety-nine cents, we can be sure they wouldn’t have spent more than $30 on them.

Those publishers will all get royalties…and possibly, much bigger royalties than they would have gotten for sales which probably wouldn’t have happened otherwise.

Authors whose books were part of the KDP Select program (that’s what gets indie books into the KOLL) were automatically made part of KU:

“All books currently enrolled in KDP Select with U.S. rights will be automatically included in Kindle Unlimited. KDP Select books will also continue to be enrolled in the Kindle Owners’ Lending Library (KOLL) available to Amazon Prime customers in the U.S., U.K., Germany, France, and Japan where authors will continue to earn a share of the KDP Select global fund when their book is borrowed. KOLL borrows will continue to be counted when a book is initially downloaded.”

–Amazon e-mail

So, why wouldn’t every indie author jump into KU?

There’s one big sticking point.

KU requires exclusivity for Amazon for indies…that’s part of the KDP Select rules.

Put your book in KU (through KDP Select) and you can’t sell it through SmashWords or Barnes & Noble.

I actually think it’s possible that requirement will go away at some point, or at least, have two tiers of royalty for exclusive and non-exclusive.

Obviously, the exclusivity rules don’t apply to tradpubbed books…Harry Potter e-books aren’t exclusive to Amazon, and are part of KU.

So, KU is most beneficial to books which weren’t selling well, and to very low-priced books. It’s not as beneficial to books which do sell well and are higher priced.

How will this affect Big 5 publishers and their brand name authors?

Unless it starts significantly cutting into “piece” sales (buying a book at a time), it doesn’t affect them much. They may think that putting books into KU will cannibalize their piece sales…at least for the frontlist (the new and bestselling books).

If it does start to cut into piece sales…the game changes.

I can imagine that by the end of 2015, 10% of e-book downloads happen through KU.

That’s not ten percent of the income…a lot of those would be books with micro sales.

It could be, then, that a brand name author starts putting short stories and other “peripheral” material to big series into KU.

Not necessarily through their tradpub.

They may correctly feel that so much discovery is happening through KU that they can’t ignore it.

This might also spur a growth of Kindle Worlds (Amazon’s program which licenses books, comic books, TV shows, movies, and so on so that anyone can write in them, following certain guidelines, and the rightsholder, author, and Amazon all get a cut).

A tradpub could license a series to KW, which would then result in non-canonical works in KU…which in turn serves to promote the non-KU books.

The more successful KU is, the more successful it will become.

Now, people are undoubtedly thinking of ways to game the system. I asked Amazon what happens if somebody borrows a book, reads ten percent of it (triggering a payment), returns it, and then borrows it again and again reads ten percent.

One of my regular readers and commenters, Tom Semple, asked what would prevent someone from just asking a bunch of people to borrow it, jump to the ten percent mark, and then return it.

The answer is that Amazon has made it clear that if they decide you are doing things like that, you are out. Naturally, they can always stop carrying someone’s book, they don’t really need a reason. I don’t want to get into any non-public details about this…suffice it so say, they aren’t going to get “tricked” much and suffer the consequences. I think it’s far more likely we will hear about them thinking someone has done something wrong who hasn’t. They are pretty good about taking “appeals” in those cases…but we see it happen on the forum that someone’s posts are deleted, and they never figure out why, for a much smaller example of what might be Amazon being overly cautious.

Now, as to what is happening with the KOLL:

As you can see from the quote from the Amazon e-mail, the KOLL continues to exist: no change at this point.

That said, I’ve seen many threads in the Amazon forums where people think it has been discontinued.

That’s because the interface for getting to it has changed, and that has been affected by KU.

Basically what has happened, according to Amazon (and I asked them a detailed question) is that, if you are a KOLL member who is not eligible for a loan right now (because you’ve already borrowed a book this calendar month), you’ll see the KU “Read for Free” button instead of the KOLL “Borrow for Free”.

According to them, it works like this:

A Prime member and eligible for a KOLL loan will see “Borrow for Free” button on Prime eligible titles

A Prime member who has hit the KOLL limit will see “Read for Free” with KU eligible titles

Someone who is neither a Prime nor a KU member will see “Read for Free” with KU on KU titles which are also Prime titles, and will see “Borrow for Free” with Prime on Prime titles which are non-KU titles

Quoting Amazon: “For the E-readers and Kindle Fires, you’ll see the above, except for Kindle Touch and Kindle Paperwhite users will see the “Read for Free” button regardless of their current KOLL status.”

Hypothetically, then, the confusing thing has been that a “borrow” button wasn’t available in the browser, but only when a KOLL loan wasn’t availbale..and Kindle Touch and Kindle Paperwhite users didn’t see a KOLL button regardless.

That doesn’t answer everything: how does a Paperwhite owner make a KOLL borrow? Apparently, from what I’ve heard anecdotally, clicking that “Read for Free” on your Paperwhite will make it the KOLL loan if you haven’t done one yet that month.

I hope that makes it clearer.

What do you think? Is KU a good deal for authors, a bad deal for authors, both or neither? Feel free to let me and my readers know what you think by commenting on this post.

* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. Shop ’til you help!

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

I assume it works like the KOLL or a library book: if you have the book, you have your annotations. So, if you buy it later, you still have your notes.

I agree with your second point. Having a predictable book expense is going to be important for a lot of families, and could push people into going e. Given the likelihood that a child might have a device already on which to read e-books…$9.99 a month for “unlimited” books might seem easier to budget.

How do you think the system is going to handle determining if the 10% read mark has been reached, since so many people keep the wireless off to save battery life? If you had a couple of books from KU on the Kindle, you might delete each as they are read, and not turn on the wireless until you need more.

The book will still indicate your “furthest page read” to Amazon. At least, I assume that’s the case. If someone reads a whole book and removes it from the device, I think Amazon still knows you had gotten to the last page. There are ancillary files that track that stuff.

Thanks for sorting out the KOLL stuff, I was concerned I would (effectively) not be able to use my KOLL monthly borrow (even though I often do not. I borrowed from KOLL this month and except for a few titles that are KOLL only, I’m not seeing the greyed out ‘download for free’ button. But from what you are saying, the option will return next month when my KOLL abilities are restored.

I’ve discovered a couple of glitches:

Of the 2000+ KU books that include narration, I have probably purchased a couple of dozen. One would think I’d be able to add narration for free, using one of my 10 KU slots. However, this appears to be impossible. On my Fire it offers to Download but fails to do so, and then the button changes to Read and Listen even though there has been no audiobook download. If I try to borrow the book on amazon.com using KU, it won’t let me do it because I have already purchased the book. Hopefully they’ll fix this.

Also it seems a little impossible to discover books that are in KOLL but not in KU. You may happen upon them, but only by traversing dozens of KU titles. As a KU subscriber I may yet want to ‘use’ my KOLL monthly borrow for something. It doesn’t make sense to use a KOLL borrow if it is in KU (much more flexibility with KU borrow) but how can I discover books to use KOLL borrow on? So far all I know of are foreign language editions of Harry Potter (which are not in KU) and ‘Guns Germs and Steel’. But there must be hundreds of others.

As for the exclusivity of KDP Select, I wonder if one could produce a serialized edition of a larger work, and put those in KDP Select, while withholding the complete version from Kindle Store entirely and selling that elsewhere (or the reverse, I suppose). Probably Amazon would not allow that, any more than US Congress would allow 6 Californias…

On your last point first, I suggested something somewhat similar to someone who commented on the About page…although it’s a bit different.

I think what may happens is that we’ll see ancillary material to big literary universes in KU: new short stories, background reference works, that kind of thing. Those may even be independently published (with the tacit approval of the publisher of the main works) by the author. The main works would not be in KU, but would still be sold by the publisher…perhaps even directly (although the Big 5 haven’t really figured out a way to do that).

That way, Amazon gets attractive exclusive material, and the publisher gets discovery for the canon.

I think that’s more likely (and less messy) than serialized versions.

I appreciate the information on the audiobooks! I only downloaded one where I had not purchased the e-book, and had no problem. Clearly, there are still some rough edges to smooth on KU…and that includes the KOLL information issue.

I should add that going the ‘other way’ works fine: where I already own the audiobook, I’m able to borrow the corresponding title from KU and it recognizes that narration is available (even where the KU title does not include narration).